In 1995, the City of Sioux
City entered into a three year agreement with Wheelabrator EOS (now US
Filter/EOS) to operate and maintain the City's 13 MGD wastewater treatment
plant and lift stations. The agreement provides for an optional two year
extension. Under the agreement EOS is also responsible for the industrial
pretreatment program including monitoring fifteen industries with monthly
billing. The City will continue to own all system components, retain rate
setting authority and retain control and responsibility for capital
investments.

ESTIMATED/ACTUAL COST SAVINGS -- IMPACT ON RATES

The three year contract
provides for an annual payment to EOS of $2.2 million with a yearly
adjustment of 75 percent of the Consumer Price Index. The City realized an
annual savings of $600,000 over the previous contract operator. This cost
savings resulted in a 14 percent decrease in user rates throughout the
City. Operation of the facility has shown to be efficient and has met
expectations. Under EOS, service has improved due to the exceptional
operations staff.

LABOR RELATIONS

When EOS took over the contract in 1995, jobs were offered to all current employees.
However, some employees opted to leave the facility. The current operational staffing
level is lower than under the previous contract. Overall staff wages increased slightly
with the new contract. EOS staff are members of the Local Union 811, Electrical workers.